Why Coupons, Promo codes, and Extreme Couponing are Doomed

Coupon codes and promo codes allow online shoppers to obtain discounts that they normally wouldn’t when purchasing an item. Extreme couponing allows carts full of products to go out the door for pennies. In this depressed economy, people all over want to know “how to coupon?” All these discounts and in fact the entire method of coupon shopping, is doomed.

Why are coupons doomed? There are a number of reasons to support the doom of both printed coupons and electronic coupon codes. New technology is a prime reason. Limiting fraud is another. Finally, new forms of advertising and discounting will combine to form a new method of shopping.

Technology such as behavioral pricing, advanced customer segmentation, and dynamic demand pricing allow online retailers to price discriminate at finer and finer levels than ever before. This means that combining vast amount of customer data available in merchant databases like purchase history, customer demographics, and social media, online merchants can deliver different products and pricing to each site visitor. Imagine that you tweet your friends that you want to buy a new computer, and you post about this on your blog or in a comment. Amazon, knowing that you have searched for computers recently and finds links on a blog comment that tracks back to your profile, increases the prices on all computer items presented to you across all categories. Using browser history, demographics and a global purchase history, a merchant presents an upsell offer bundling a number of high-end related items.

Dynamic pricing isn’t limited to websites and the online world. The New York Mets plan to roll out dynamic pricing for seats across the entire stadium. There have always been premium games against the most popular teams, but imaging getting a discount because a star pitcher got injured or paying more because the team is suddenly in contention in September.

Dynamic pricing

How much longer until this spreads to grocery stores? Picture paying more for a box of Cheerios because Corn Flakes are out of stock, or a quarter more per gallon of gas on the way home from work at 5 o’clock versus the price at 11 o’clock at night.

Advanced loyalty cards and mobile payments will also change how coupons and discounts work in the real world. Electronic discounts loaded directly to a loyalty card or account won’t require customers to bring printed coupons with them to the store. They will simply be credited automatically at checkout. Eventually customers will be able to manage their loyalty accounts online, and select which coupons, deals, and special offers to load directly from merchants, the sponsoring companies, or even individual products. Mobile payments will work similarly, with discounts being credited to accounts directly after visiting a promotion site or liking a company on their Facebook page or the social media site. With all the additional customer data these advances will bring merchants, they will be able to reward their best customers with specials, better manage inventory, and in general the power will shift from consumers to merchants.

Besides presenting more targeted marketing preventing fraud and abuse is important for both merchants and sponsors. Brick and mortar stores have started to limit coupon use at the shopping trip, account, and monthly levels. Extreme couponing, where cart-fulls of product go out the door for pennies after absorbing 30 to 60 minutes of checker and bagger time, is ending. Double coupon days are finished, as are the acceptance of printed coupons from the internet. The sharing of coupons and buying multiple papers for the coupons will end as retailers again limit the use of both specific coupons and total coupons over periods of time such as a rolling 3 month period. Additionally, for the printed coupons that are distributed, expect to see anti-counterfeit properties coming, such as Nano-holes that provide a bright shimmering effect. With the individualized electronic discount and personalized promo codes, and the uniquely coded paper coupons, sharing, trading and duplicating these will be impossible, or at least beyond the casual shopper.

2d barcode

Coupons may not disappear, but in their current form, they certainly are doomed because of a period of rampant fraud and abuse by the few extreme coupon users. Expect more personalized and useful discounts applied to an individual account or mobile phone, and uniquely coded 2d barcodes coming to coupons that track the user account, distribution method, and location.

We use a very few coupons. Somehow it is very time consuming to go through all of them and find any deals that would be interesting to us. We eat mostly organic food, locally grown and we don’t shop in Walmart.

It is very rare to see coupons for organic products, food in particular. Perhaps there is an opportunity there for some organic farms or producers, but perhaps there aren’t any because at this point demand is so much greater than supply.

A few years ago, a favorite blogger of mine posted an April Fool’s joke saying that several popular grocery stores were cancelling their coupon policy. At the time, it sounded far-fetched, but I have heard rumblings that echo your sentiments. It will be a shame, since I’m one of those who uses coupons casually WITHOUT abusing the system!

I actually think that the process will be easier for the casual coupon user, where it will be automatically credited to your shopper card and will be prompted at checkout to use it, or perhaps on your next shopping trip via a personalized coupon printed at the checkout.

I dislike dynamic pricing. And I’m a little bit confused. Is it already happening on sites like Amazon or is it just projected to? Is that why they want me to add stuff from other sites to my wishlist? So they can compare and price accordingly…specific to me?

Dynamic pricing allows merchants and sellers to extract more value from their customers, and thus those merchants that don’t have it now, certainly would like it. The balancing factor is customer perception of that dynamic pricing. But that’s only really going to matter if some large merchants decide not to price dynamically. I would be very surprised if Amazon is not doing this now, at least on a test basis. And I do have ears out hear in Amazon country.

I never use coupons so I’m not too worried about that. But, dynamic pricing is scary as hell. I’ve seen it done within the sporting world and for concerts but if that happened at the grocery store I would be pissed! I think what keeps it in check for grocery stores is competition. There is always another grocery store right down the street.

I think you’re right. I like couponing and use them when I shop, combining sales and coupons. You get some pretty good deals. But then I noticed the annoyance of the stores manifesting itself quickly. People had tried to outmaneuver the system, some cashiers complained, and often committed coupon fraud. With more and more stores losing money because of that, I can’t imagine it being a lasting thing.

When one is on an extremely limited budget, couponing is useful, and I do it – combining coupons, both electronic ones loaded to store loyalty cards, and paper coupons, with sales – but only to a limited extent. I am *not* an extreme couponer, I do not have a stockpile, I do not try to get my groceries for next to nothing, and I don’t buy ridiculous amounts of something I don’t need just because of a deal. I *do* however have lots of ways I save money on my grocery shopping, and it works well for me. If it were to be ruined by the crazy coupon women going to extremes I would be extremely disappointed.

Yes that is the danger, if the companies find that they aren’t making enough money with distributing coupons because of the fraud and abuse, they’ll either stop the coupons or they’ll change the method of delivery, which is what I propose will happen above. Thanks a bunch for your thoughts!

The problem with electronic coupons is that they don’t double, like printed coupons do. That’s why I add e-coupons as the last step, only doing them for ones I don’t have a printed coupon for.

And if a grocery store stopped accepting coupons? I’d switch to a different store. And so would a lot of others. A policy like that might work for Whole Foods or Wegmans, but it would sink the ship for Kroger, Safeway, etc.

The supermarket is probably the industry with the most budget-conscious shoppers, and savings are the way that stores differentiate themselves and attract customers from competitors. Dropping coupons would put a store at a competitive disadvantage.

Even the only supermarket in the small town I grew up in accepts online coupons now, a policy they resisted for years because of concerns about fraud. But it was also a policy that meant that customers were driving 20 miles away to the next closest store instead of shopping there.

This was extremely informative, and a little scary! I love to use coupons, but usually forget to bring them with me when I shop. I work for a company that provides a great smartphone app where I can specify the types of offers that I receive and I even get reminded to use the digital coupon when I pull into the retailer’s parking lot. Technology is changing everything!

I also don’t really like to tote my coupons around. If I stop by the store on the way home from work, I won’t usually have my little envelope with me. If they were simply on my phone or my loyalty card, life would be much easier. Thanks for joining us and for your comment!

I shop a lot at Trader Joe’s, who never have coupons. But I almost prefer it that way.. I know what their “real price” is, and it’s better than wondering if I’m going to miss out by going to the store today rather than during their 20% off sale two days later.

I’m also a big fan of Trader Joe’s, though none of the ones I go to really have much in the way of produce. Everything else I may want though they usually have at a reasonable price for organic. There is something to be said about not feeling like you missed something with the weekly sales. Great thought.

Karl, Interesting article. As the digital wallet comes into the mainstream, we’ll begin to see very specific coupons geared towards us. As long as there are print newspapers, there will be coupons. (death toll)

[…] lots of ways to win!Karl at Cult of Money thinks coupons, promo codes, and extreme couponing are doomed in their current forms. You guys already know how I feel about coupons, so I can’t say I’m sad to see this […]

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I think that the majority of mass consumption will go this way. Football and baseball games are getting priced this way, more popular visiting teams already cost more than other games, and weekend games have a premium as well. I imagine that some will want the government to get involved, but that is likely to simply increase costs.

I’ve experienced this first-hand. My grocery store of choice recently decreased it’s “like coupon” limit from 4 to 3, meaning you can’t use more than three of one coupon in any single order. It’s meant to deter extreme couponers, but it’s hurting me – and I’m definitely only a casual couponer!